adminHe said inter-parastatals debt referred to loans, trade credits, and other inter-company account payables and receivables between state enterprises and parastatals.
“The parastatals are in a vicious cycle of debt where the entities owe one another. For instance, we may have a situation where a parastatal in the telecommunications sector is owed by a parastatal in the energy sector and the entity in the telecommunications sector also owing a utility in water and sanitation sector and the cycle goes on and on.
“My ministry is thus currently drafting a strategy on addressing inter-parastatals debt,” he said.
“In the past years there has been a rapid accumulation of these cross arrears, which has resulted in an interlocking chain of arrears.
“This situation has generated negative spill-over effects in the whole economy. This is due to the fact that the consequence that results from inter-parastatals cross arrears does not reside solely to those specific entities affected, but has a multiplier effect that spreads throughout the economy, creating financial problems for other enterprises and sectors in the process. This can be best described by a scenario where the State
Enterprises and Parastatals (SEPs) are in some cases not allowed credits by private suppliers and resort to cash trade, generation of overdue payables by other SEPs to that entity that is denied credit elsewhere may result in demand constraints and consumption decline in other sectors of the economy.”
He said the fast growth of inter-parastatals debt that had characterised the public enterprises sector over the years had caused severe welfare loss throughout the whole economy as a result of tax wage and pension arrears.
This, he said, had a direct socio-economic deprivation to the pensioners, wage earners and their dependents, and the Government in terms foregone tax revenue.
He said Government through his ministry was devising the debt strategy that would be anchored on home grown solutions.
“My ministry is looking at how other countries have in the past have done it. While taking a leaf from other countries, our strategy will be based on homegrown solutions relevant to our own situation,” he said.
Public entities have come under public spotlight for poor performance in terms of service delivery owing to huge debts overhang among other challenges.
The country has 78 parastatals.
As a result of gross mismanagement, corruption and lack of good corporate governance, some of the entities instead of contributing to national economic development were milking the Government through underperformance.
Despite the liberalisation of the economy, which saw the creation of enabling environment through the adoption of a multi currency system in February 2009, most of Zimbabwe’s public entities are still operating at a deficit with inter-debts amounting to millions of dollars.
Online Reporter